L&T Strengthens Sustainable Finance Portfolio with $700M Trade Facility
Indian multinational Larsen & Toubro (L&T) has secured a $700 million Sustainability-Linked Trade Facility (SLTF) from Standard Chartered, further enhancing its access to capital linked directly to environmental performance metrics. The transaction follows L&T’s issuance of India’s first listed sustainability-linked bond under the Securities and Exchange Board of India’s ESG Bond Framework in June, reflecting the company’s continued commitment to sustainable financing.
Tying finance to environmental outcomes
The SLTF links financing terms to measurable reductions in greenhouse gas (GHG) intensity and freshwater consumption—two key environmental risks for L&T’s heavy industry and infrastructure operations. By embedding these indicators into trade finance, the company aligns with the sustainability-linked loan principles established by the Loan Market Association.
Under the SLTF framework, L&T will report annual progress on agreed key performance indicators, with independent third-party verification. Global assurance firm DNV has provided a second-party opinion, validating both the targets and the methodology. This structure mirrors a growing global trend, where corporates are increasingly held accountable for their environmental impact. For investors, third-party verification mitigates reputational risk while transparent reporting strengthens market confidence and addresses concerns over greenwashing.
Corporate strategy and ESG goals
L&T has set ambitious targets of achieving carbon neutrality by 2040 and water neutrality by 2035. As a conglomerate with significant energy, construction, and manufacturing exposure, these goals are intended to improve operational efficiency and address regulatory pressures.
A spokesperson for L&T stated, “This SLTF underscores our commitment to sustainable business practices. ESG principles are integral to our corporate strategy, guiding investments in low-carbon technologies, resource optimisation, and biodiversity conservation. By demonstrating progress on these metrics, we strengthen investor confidence and ensure long-term value creation.”
The company is increasingly linking its financial strategy to ESG performance, recognizing that sustainable finance provides access to lower-cost capital while reinforcing its market reputation.
Banking perspective and India’s sustainability agenda
For Standard Chartered, this transaction reflects the expanding role of international banks in supporting India’s corporate sustainability efforts. Shobana Chawla, Head of Sustainable Finance Origination at Standard Chartered India, said, “Through this facility, we are supporting L&T’s decarbonisation journey. Sustainability remains a strategic priority for Standard Chartered, and we aim to facilitate the development of a more sustainable economy in India.”
The deal comes amid India’s push for stronger ESG reporting and energy transition policies. With domestic regulators demanding enhanced disclosure and international investors seeking credible sustainability strategies, instruments like the SLTF are becoming increasingly important for bridging capital needs.
Implications for investors and corporates
The $700 million facility positions L&T among the largest issuers of sustainability-linked finance in emerging markets. It demonstrates how corporates can integrate ESG criteria into everyday business operations rather than relying solely on green bonds. For executives and boards, the L&T case highlights that ESG performance is now inseparable from financial strategy. Strong target-setting, independent verification, and transparent reporting can unlock large-scale, lower-cost financing and provide competitive advantages. 
Global relevance
While this is an India-based transaction, its structure aligns with global trends in sustainable finance. Emerging market corporates like L&T play a critical role in global emissions reduction, and access to international capital via sustainability-linked instruments will be crucial for financing large-scale transitions.
For policymakers, the deal underscores the importance of robust verification frameworks and consistent disclosure standards. For investors, it provides a concrete example of embedding environmental metrics into financial instruments in high-emissions sectors. As global finance increasingly prioritizes climate-aligned portfolios, L&T’s approach illustrates how ESG credibility is becoming a key determinant of capital access.
